Rice Business Report May 2019 Rice Business Report

49 Is Your Company SCA Compliant? Figure It Out Before the United States Department of Labor Figures It Out for You Continued from page 48…… We recommend being vigilant about incorporation of the appropriate WDs into the contract. A failure to do so can lead to confusion, potential problems in cost recovery, and uncomfortable discussions with DOL investigators about why the contractor is not paying per the appropriate WD. Providing and Taking Credit for Bona Fide Fringe Benefits The SCA requires payment of a minimum “fringe benefit,” as described in the applicable WD. The health and welfare (H&W) fringe benefit is one of the required SCA fringe benefits, and the current fringe bene- fit is $3.81 per hour. (Note: DOL will issue a new H&W fringe benefit rate in mid-June.) A company has wide discretion in determining how it satisfies the H&W fringe benefit requirement, but the SCA does re- quire that any fringe benefits provided to SCA covered employees qualify as “bona fide” in order to be credited against the H&W obligation. Because companies often change benefit packages, companies per- forming under SCA covered contracts should consider whether: (a) they are meeting the current (and an- nually changing) H&W fringe benefit requirements; (b) they have replaced benefits that may have been removed since they last evaluated their fringe benefit calculation; and (c) they are taking full credit for the full range of fringe benefits provided and determined that these benefits qualify and remain as “bona fide” fringe benefits. Contractors of course must ensure that fringe benefits they count towards their H&W obligations are sup- portable as “bona fide” fringe benefits. The core requirements are set forth in 29 C.F.R. § 4.171(a), which requires that a “fringe benefit plan, fund or program” meet the following criteria (among others): (a) the plan's provisions must be specified in writing and communicated in writing to the affected employees; (b) contributions must be made pursuant to the terms of the plan; (c) any contributions made by employees must be voluntary (and pursuant to specified payroll deduction regulations, if applicable); (d) the primary purpose of the plan must be to provide systematically for the payment of benefits; (e) the plan must con- tain a definite formula for determining the amount to be contributed by the contractor and a definite for- mula for determining the benefits for each of the employees participating in the plan; and (f) any contrac- tor contributions must be paid irrevocably to a trustee or third person pursuant to an insurance agree- ment, trust, or other funded arrangement. Continued on page 50……. Rice Business Report

Rice Business Report May 2019 Rice Business Report | Page 49